Given the significant rise in regional bond issuance following the 2008 global financial crisis, Next Europe Asset Management Limited aims to grow its assets under management by attracting a variety of new local Eurozone investors to the broader set of alternatives available in the current fixed-income market. Several of the indexes that Next Europe offers as a basis for investment are as follows:

• S&P Eurozone Sovereign Bond Index. This index consists of fixed-rate, sovereign debt publicly issued by Eurozone national governments for their domestic markets with various maturities including 1 to 3 years, 3 to 5 years, 5 to 7 years, 7 to 10 years, and 10+ years. For example, the 1- to 3-year index had a weighted average maturity of 1.91 years and a modified duration of 1.87 as of 31 July 2020 (www.spglobal.com).

• Bloomberg EUR Investment Grade European Corporate Bond Index (BERC). The BERC index consists of local, EUR-based corporate debt issuance in Eurozone countries and had an effective duration of 5.28 as of September 2020.

• Bloomberg EUR High Yield Corporate Bond Index (BEUH). This index consists of sub-investment-grade, EUR-denominated bonds issued by Eurozone-based corporations. It had an effective duration of 3.68 as of September 2020 (www.bloombergindexes. com).

• FTSE Pfandbrief Index. The Pfandbrief, which represents the largest segment of the German private debt market, is a bond issued by German mortgage banks, collateralized by long-term assets, such as real estate or public sector loans. These securities are also referred to as covered bonds and are being used as a model for similar issuance in other European countries.

The FTSE Pfandbrief indexes include jumbo Pfandbriefs from German issuers as well as those of comparable structure and quality from other Eurozone countries. The sub-indexes offer a range of maturities, including 1 to 3 years, 3 to 5 years, 5 to 7 years, 7 to 10 years, and 10+ years (www.ftse.com/products/indices).

Which of the above indexes would be suitable for the following investor portfolios?

A highly risk-averse investor who is sensitive to fluctuations in portfolio value.